August
2004 Issue: A New Financial Year is upon
us!
 Interest
Rate Rises?
Impact
of the new vendor transfer duty
Federal
Election: Who will win & what impact
will that have?
Featured
Story: Nissan's move to Homebush is getting
closer
Emerging
market trends
News
from the world of industrial real estate
- Hunter Economic Zone
Where
have all the bowling alleys gone?
Interest
Rate Rises?
Depending on which newspaper article you
read, or analyst you are prepared to believe,
interest rates are expected to increase
over the next six to twelve months. The
big questions are “by how much”?
and “how fast”?
The higher profile economists (some would
say publicity-driven) are predicting sharp
increases, especially if Mark Latham wins
the Federal Election. Predictions of 9 –
10% lending rates by 2005 are scaring off
many highly geared investors whilst the
longer-term players who remember the early
1990’s feel comfortable that the projected
increases will not destroy the property
market.
In fact, when asked these questions, most
of MJM’s clients were of the opinion
that modest increases were expected and
were in fact needed to calm the market down
so that sustainable long-term investment
and development strategies could return.
This adjustment has already occurred in
the CBD residential apartment market where
rentals, asking prices and capital gain
expectations are returning to more reasonable
levels.
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Impact
of the new vendor transfer duty
May 31st 2004 will go down in history
as The Day That Property Investment Changed
Forever. Thousands of sales transactions
for commercial real estate were exchanged
at short notice as vendors raced to beat
the 2.25% tax the Carr State Government
was enacting the following day. A new type
of cooling off period was invented overnight
to allow for the sales to go through before
the tax became effective.
As always, panic and publicity were the
winners with numerous predictions of the
total decimation of the property investment
market in NSW as money was channelled to
Queensland, Victoria and New Zealand.
Not surprisingly, in the time since the
tax came into effect the market has returned
to relative normality. The pre-June 30 auctions
saw good clearance rates at prices that
the market predicted. All new taxes attract
short term fear but sanity soon returns
with the long term players looking beyond
today.
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Federal
Election: Who will win & what impact
will that have on the economy & the
property markets?
It appears that it will be a closely fought
contest with a wide range of issues including
Iraq, Peter Garrett and the quality of the
Howard Government’s economy management
policies in recent years being major considerations
for voters.
MJM IS CONDUCTING A SPECIAL POLL…WHO
WILL WIN?
VOTE NOW BY EMAILING ME AT michael@mjmproperty.com.au
The results will be published in the first
newsletter after the election, due to be
held later this year.
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Featured
Story: Nissan's move to Homebush is getting
closer
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As can be seen from
the schedule of photographs, the new
6,000m² Nissan office and spare
parts warehouse at Homebush is steaming
along ahead of schedule.
Completion of the base building is
due late August 2004 with Nissan’s
fitout and formal occupation on track
for late September – early October
2004.
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Nissan’s usage
Development Application has been lodged
with Strathfield Council and, according
to their project architect, is due for
approval in late August 2004.
Nissan’s Michael Cameron recently
inspected the site with MJM’s
Michael Mannix and commented on the
professionalism of the service team
in assisting the company with this complex
and long-term relocation project. |
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“Michael has
been constantly supporting us through
the project and has provided an excellent
point of contact with the landlord,
architect and builder” he said.
“Most agents walk away after
the deal has been done but Michael
has stayed with us and is always available
at short notice to arrange site inspections
or to clarify any issues in the development
process.”
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Nissan’s new landlord, Macquarie Goodman
Industrial Trust, commented that the estate
is now 60% leased, with a blue chip tenancy
profile including Ateco Automotive, Nissan,
Optima, UPS Logistics, Fuji Xerox, Valley
Girl and Fujitsu.
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Emerging
market trends
Small business continues
to evaluate the 'buy rather than lease'
property strategy. Where the location,
quality and size of the business premises
won’t grow or contract, more
and more SME’s are examining
the purchase option.
MJM is currently acting for two clients
who are pursuing this strategy in
two distinctly different ways. Firstly,
Business Diagnostics & Solutions,
currently leasing a modern office
suite in Rozelle, were offered a deal
to acquire a brand new office and
warehouse strata unit in Homebush
near the Olympic Stadium. This location
was considered superior for staff
and clients and the size of the premises
allowed for ample future expansion.
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Secondly, Street Consulting Pty Ltd wished
to examine the viability of acquiring a
small office suite in the current complex
they occupy in Terminus Street, Castle Hill.
Whilst the preference was to stay in this
location they sought advice from an independent
consultant on the status of the market to
ensure that any acquisition reflected fair
market values.
MJM Property Group were retained by both
companies to undertake a comprehensive market
overview and research program covering supply,
demand, recent sales, market rental rates
and indicative investment yields for properties
with leases in place.
In each case the clients have put the purchase
on hold to allow time for a reasoned decision
to be made on the basis of MJM Property's
counsel.
As always, professional advice is vital
in the acquisition of commercial properties
for investment or owner occupation and MJM
offers the full range of services from agency
co ordination to valuation & consultancy.
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News
from the world of industrial real estate
- Hunter Economic Zone
HEZ is a 900 hectare site located south
of Weston and Kurri Kurri in the Hunter
Valley which is being developed as an environmentally-sound
industrial business park over the next ten
years.
The project is truly unique, with a combination
of national parks, heritage areas, habitat
protection zones, special uses, water management,
infrastructure, freeway extensions and rail
facilities all combining to provide a superb
long term location for large businesses.
CHECK OUT THE WEBSITE at www.hez.com.au
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Where
have all the bowling alleys gone?
Many of the tenpin bowling alleys in NSW
offer unique property investment and development
opportunities. They are usually located
in landmark positions, with highly functionable
and flexible buildings that can be easily
converted for other purposes.
| For
example, AMF recently auctioned six
of their suburban and regional bowling
alleys in NSW with leaseback terms
ranging from six months to five years.
Prices achieved ranged from $805,000
(Mayfield, near Maitland) to $5.5m
in Mt Druitt where the 4,472m²
building is being leased back for
five plus five years at $475,000 pa
net with fixed 3% annual rental increases.
The sale price reflects a net return
of 8.64%
Each property had its own unique quality
with most being short or long-term
development opportunities with only
Mt Druitt sold as a long-term dormant
investment in a prime location overlooking
Mt Druitt pool and near to the local
Westfield Shoppingtown.
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The buyers varied, from owner-occupiers
to developers and long term investors.
In addition the landmark Castle Hill Bowl
is for private sale on a fully leased basis
for $4.3m, reflecting a 7.55% net return.
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